Well Respected VC Firm Comes Out In Favor Of Independent Invention Defense Against Patent Infringement Lawsuits

from the good-news dept

Seeing as we were just talking about claims from a patent attorney that no legitimate VCs can be against software patents, it's good to see that one of the most respected VC firms in internet-related issues, Union Square Ventures has come out strongly in favor of an independent invention defense against patent infringement. This is great. I have no idea if I helped to make this come about, but a year ago, Union Square partner Fred Wilson had spoken out about how patents were harming his portfolio, and suggested some ways to fix the system (not including an independent invention defense). I responded with a post suggesting he consider an independent invention defense beyond his proposals, as it would really solve a lot of the problems. So it's really fantastic to see the firm take a stand on such an important issue -- proving once again what a lie it is to claim that VCs require patents. From Union Square partner Brad Burnham's post:

Almost a third of our portfolio is under attack by patent trolls. Is it possible that one third of the engineering teams in our portfolio unethically misappropriated technology from someone else and then made that the basis of their web services? No! That's not what is happening. Our companies are driven by imaginative and innovative engineering teams that are focused on creating social value by bringing innovative new services to market.

Our companies are being attacked by companies that were not even in the same market, very often by companies they did not even know existed....

I know of no case where the engineers in one of our companies were aware of the patents that are now being used to attack them. The moral rightness of this screams at me. If, as an engineer focused on solving a problem, I happened to come up with an idea that is in some way similar to yours, then that in itself should suggest that it was obvious and not patentable. Unfortunately, that does not really help. There, the burden of proof is still on the startup and it is still smarter to settle than to burn precious capital on a defense.

If, on the other hand, the troll was required to show the startup had some prior knowledge of their technology, the burden would be shifted to the attacker, and this blatant abuse would come to a grinding halt. If you believe as I do that innovation is key to social progress, please support patent reform. It is a complicated issue, but an independent invention defense is an obvious place to start.

It's really difficult to see how anyone can be intellectually honest with themselves and not be in favor of an independent invention defense. It's difficult to see how anyone could justify the idea that even if someone comes up with something totally independently, they can't use their own inventions.

Reader Comments

In a side note, one troll accepted services from our portfolio company in lieu of cash because the troll could not technically do the thing that our company was accused of copying so we are providing them with the capability. The irony there kills me. It feels a little like being forced to dig your own grave before being shot.

"It's really difficult to see how anyone can be intellectually honest with themselves and not be in favor of an independent invention defense. It's difficult to see how anyone could justify the idea that even if someone comes up with something totally independently, they can't use their own inventions."

Re: This was an entertaining and enlightening read.

Concerning software (inexpensive to play the game), there are a ton of people that could be filing patents (assuming costs were $0, ie, submitting an email with the patent claims) once they master the art of writing patents. Instead of writing open source software, which actually benefits society greatly, they could be filing patents in order to defend themselves against the trolls and other companies. Now, how does that help society? On the other hand, if the courts and/or legislators keep software patents in play, then it will become almost a necessity for open source developers to become patent trolls themselves. After all, you need money in order to defend against patents and pay for the many infringements your software is likely to have.

Short story: monopolies that do not promote the progress of science and useful arts are unconstitutional, and software patents almost surely fall into this bin in likely all or just about all cases. There is simply too high of a cost to society. And the sad part is that there are so many ways to reward inventors without having to break the ankles of every other developer (and potential inventor) out there so that the sole official inventor can indulge in a monopoly or monopoly profits for 20 years. Talk about society shooting itself in the legs despite knowing better (unconstitutional monopolies).

How can the little guy prove it?

I agree with the need to stop patent trolls from being a drag on society, innovation, and progress. But I also think that it is incredibly difficult to prove that someone 'stole' your idea.

How can a little independent innovator/inventor prove that a large company did steal his/her idea (if that were to happen)? I can't imagine a rule of thumb that could cover this scenario unless you just get rid of software and business method patents all together.

Re: How can the little guy prove it?

How can a little independent innovator/inventor prove that a large company did steal his/her idea (if that were to happen)? I can't imagine a rule of thumb that could cover this scenario unless you just get rid of software and business method patents all together.

Just like other lawsuits, with the preponderance of the evidence. It doesn't need a "rule of thumb," it needs the facts of that particular case.

Re: Re: How can the little guy prove it?

The specific evidence is known as prior art that would show that you were in fact the first to invent something. Prior art refers to the entire body of publicly available information that can potentially invalidate a patent by showing that its ideas were known by a particular date (in this case, by you).

If you had information showing that you invented something before the larger company, you could actually invalidate the larger company's patent. This is particularly important in the United States because we are a "first to invent" company, not a "first to file".

There are plenty of services out there, which allow you to do that. (One of which I work at: Article One Partners).

The basic principle was that due to force majeur the government had basically ignored the patent system for the duration of the war. This resulted in great innovation but there was no means to reward those involved.

Therefore at the end of the war the royal commission was set up and any inventor (whether he had patented his invention or not) could apply for reward - according to the extent to which his work had been used.

Thus Sir Frank Whittle obtained £100,000 for the jet engine - even though he had let his patent lapse before the war.

I think that we should set up a system of "recorded inventions". Anyone who has a recorded invention should be able to apply for reward if they can prove that their invention is in use.

The money may as well come from general taxation and would be limited - based on how well the overall economy is performing. I would expect the body that distributes this largesse to be pretty mean - but any truly deserving cases should be covered.

One advantage of such a system would be that it would encourage real dissemination of ideas - since the incentive would be to publish your work in an easily accessible form - unlike what the patent system encourages.

Reform is just another word for the status quo

I don't think that reforms will ever solve the problems with the patent and copyright system. These artificial and farcical systems should not exist period.

Mike has gone to great lengths to disprove the basis that most people believe necessitates an intellectual property system. Mike however has not nor has anyone else IMHO provided any plausible reason for these systems to exist in the first place.

While Mike clearly would like to see an band-aid on a already broken system, I feel if it is beyond repair already. It is clear to me that IP law benefits a minority at the cost of the majority to such a degree it is beyond asinine already.

These laws will continued to be strengthened because the best we can produce is a cry for "reform" as the system continues to travel fast and faster towards the edge of a cliff. I for one have already bailed and I feel sorry for those who still think there is something left to salvage in our imaginary intellectual property system.

Re: Re: Reform is just another word for the status quo

"It's really difficult to see how anyone can be intellectually honest with themselves and not be in favor of an independent invention defense. It's difficult to see how anyone could justify the idea that even if someone comes up with something totally independently, they can't use their own inventions."

Patent Trolls - Abandonment for Non-Use

First, I am not a patent attorney so excuse any legal errors. That being said, however, I find patent trolling to be economically indefensible. In addition to your "innocent invention" I suggest we borrow the concept of abandonment from the trademark law. Thus, if a patent is not "used" within a certain period (say 3 or 4 years), it would be subject to being canceled upon application or during the litigation process on the grounds that it had been abandoned.

This concept is entirely consistent with the overall intention of patent law (supposedly to protect the inventor and allow a "reasonable" period to profit from the invention). Those that do not "use" patents have no basis for making such a claim.

The difficult issues are defining "use" and determining when the measurement period should begin.

"Non-Use". This could borrow heavily from the abandonment concept embodied within trademark law. This is based on a factual analysis surrounding an intent to abandon. Abandonment is presumed if non-use extends for 3 years. The presumption can be overcome by presenting objective facts showing there was no intention to abandon (e.g. the non-use was temporary). Again, there is ample case law there already.

It would be nice if the concept of "Non-use" could also preclude use by merely assigning a patent to patent trolls. However, if the applicable measurement period is kept short, I believe market/risk forces would keep the trolls at bay. They seem to only want older patents where the market has clearly adopted the technology independently. I would not think they would be interested in assuming the risk inherent in obtaining a young patent for their purposes.

Commencement of measurement period. The obvious date would be issuance of the patent. However, many patent applications are delayed. divided, etc so as to intentionally prevent actual issuance. They then magically "pop" up after the market has already "invented" and adopted the same technology. Thus, issuance date would not work absent a strict tightening of the patent application process. I would thus favor a period running from the application date for the patent. The date would thus have to be longer (say 4 years instead of 3) so as to remove prejudice to an applicant that is diligent in prosecuting the patent application.

Re: Patent Trolls - Abandonment for Non-Use

There's a misconception implicit in this entire line of thought. Inventors are incented to invent by the marketplace that exists for their patented inventions. Whether the invention is ever put into use is irrelevant.

There are innumerable companies, organizations, and academic institutions that do not "use" the inventions they patent.

IBM, for example, makes far more money licensing its patents than it does making and selling products. Backyard inventors, Universities, and our federal and state governments also make a lot of money through licensing the patents they own. Whether their licensees actually use the licensed technology is up to each licensee -- which does not negate the fact that the patent-owning inventor has earned a benefit from his or her inventive efforts.

A rule that requires the invention to be put to use as a condition for patent protection would fundamentally UNDERMINE the incentive function of patents.

truth about trolls

"Almost a third of our portfolio is under attack by patent trolls."

If you're investing in technology fields, you will run into patents and inventors, or as you call them "trolls".

All this talk about “patent trolls” is pure hype. If you will look at the 1898 Rude et al. v. Westcott et al. SCOTUS case [130 US 152, 9 S Ct 463, 32 L Ed 888] you will see that at least since 1874 inventors have been selling and partnering with other parties to enforce their patents. Without doing so, few inventors and small companies can afford to enforce their patents, meaning larger competitors can easily beat them out of the market they created and run them into bankruptcy. That’s big companies idea of “patent reform”. Therefore, all this present day discussion of “trolls” is a hoax whose purpose is to cut off the small entity support system and deny them any profit from their creations. Simply put, its intent is to legalize theft.

Call it what you will...patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: “we’re using your invention and we’re not going to pay”.

Re: truth about trolls

Lets say your premise is true and big companies are pushing for patent reform to further consolidate their power. We already know the IP system is dominated by an extreme minority that continues to gain ground in their ability to litigate. According to you it is a no win situation because the claims makers in patent reform are the ones who are benefiting from it.

I can definitely see where you are coming from, but after looking over your suggested web site I can not find one premise that would prove why the patent system should exist in the first place. Mike and others have done an excellent job disproving through actual historical examples that the reasoning behind the patent system has become moot in our modern world of 6 billion people.

Rather than calling it the Intellectual Property system I think it needs to be called by its true name to reflect what it has actually become. It is now the Intellectual Slavery System. Maybe that is why I personally think the thought of reform is so repugnant. Why try to reform a blatant example of slavery?

Role of patents

An independent invention defense would discourage people from searching patent office records to use the technology that is published there. It would also be difficult to prove, because the invention they just made is, ex hypothesi, published in the patent office in sufficient detail to be adopted by anyone knowledgeable in the field.
For the first time in history the pace of invention has exceeded the term of patents. So the question is: Do we need patents any more? (If we ever did). Do they really incentivise inventions?
Maybe there is a compromise: compulsory licensing. Your patent may not get you exclusivity, it may get you cash and partial exclusivity.

Re: Role of patents

The law already discourages patent searches by levying treble damages against willful infringers. 35 usc section 284. What this means in practice is you shouldn't waste your time looking for prior art since you may find it and be unable to continue development.

Independent Inventor Defense

The problem is the same as the problem with NDAs. Someone tells a buddy about this neat invention, the buddy comes up with the idea "independently", and later on returns the favor - and the "good ol' boy" network starts doing massive harm to society.
Better would be to go back to the roots of the system, where you were REQUIRED to show a working model, and proof that you were "using the invention in commerce". So, someone who stores up patents for trolling purposes faces an insurmountable burden, until politicians hungry for campaign finances create loopholes - but that is cured by campaign finance reform!

patents - independent invention lunacy

Hearing Union Square's Wilson and Burnham argue for an independent invention exception is very disappointing. By a VC's very nature, they are putting in institutional smart money. Therefore, they should expect to play by the rules of institutional investors. If your portfolio co's don't have patents, then tell them to spend the $10K and get started.
Patents are not like Copyrights. No reason exists for an independent invention exception. Patent trolls are not without major flaws, but gutting patent law with this type of exception lets the fox in the henhouse more than it protects anybody. I would buy this argument from an unfunded entrepreneur, but not from a VC or a VC backed company. Disappointing and disingenuous from them.

"Sleeve Pinning" - Submit Your Claim

My daughter has trouble with the sleeves of her shirt. When she puts on a sweater, the shirtsleeve gets all bunched up in her armpit.

Necessity being a mother of invention, she came up with a great trick: "A method of pinning the shirt sleeve to the wrist through applied pressure from the index finger to the base of the palm". It worked, and her sleeves now stay in place.

She has been all proud of herself for two months, and demonstrates her trick daily. I told her she was not inventive, but just dumb and stupid. That trick had been done before. I told her how Ron J Riley could show her how she was not inventive, but a silly copycat. But the little arrogant fop maintained that she had come up with it herself.

Now, to be clear, I don't steal IP. So I just let my sleeves bunch up in my armpit. It's #@$ uncomfortable, but at least I walk the high ground.

So, please. If you own the rights to Sleeve Pinning, please submit your claim. This thieving little whelp needs to be put in place. She should pay the rights holder for her use of their property. She needs to fit into our society someday, so perhaps you could also submit some of those excellent curriculum materials from the RIAA.